What are the three certainties and how are they established?
An explanation of the operation of the three certainties in the law of equity/trusts and how they are required to create a trust.
Question
What are the three certainties and how are they established?
Answer
In order for an express trust to be valid, there must be certainty in: the intention to create a trust, what constitutes the subject matter and the objects who will benefit from the trust (Knight v Knight (1840)).
For certainty of the intention, the settlor must intend to create a trust (Milroy v Lord (1862)). The simplest way to do this is written within the trust document. The court will consider all of the circumstances including the wording of the trust instrument and infer the conduct (Paul v Constance (1932)) of the settlor.
The certainty of the subject matter requires that the trust property be completely segregated and thus, certain. The settlor must desire to create a trust over specified property. An exception is found in the controversial case of Hunter v Moss which held that unascertainable intangible goods may be certain.
The final requirement is the certainty of objects (beneficiaries). The test for objects differs for fixed and discretionary trusts. Fixed trusts require the beneficial interest to be fixed. Thus, there must be a complete list of beneficiaries (IRC v Broadway Cottages [1955]). Discretionary trusts leave the beneficiaries to the complete discretion of the trustees (McPhail v Doulton [1971])